Global Microgrid Market to Grow 21%, Exceed $35B by 2020

Analysts at Transparency Market Research forecast the global microgrid market will expand at a 20.7 percent compound annual growth rate (CAGR) between 2014 and 2020. Pegging the value of the market at $9.8 billion in 2013, the market research provider expects it will reach $35.1 billion by the end of the decade.

Supported by funding from government programs that aim to increase integration and use of renewable power generation, Transparency sees campus and institution microgrids growing fastest out to 2020. It also expects remote islands microgrids to increase at a rapid rate.

Drilling down geographically, Transparency expects military microgrid deployments to be the fastest growing microgrid market segment in North America. The U.S. military’s growing use of renewables, as well as its drive to enhance energy security and reliability, lend support to this expectation.

Growth Prospects for a Rapidly Evolving Microgrid Market

Transparency breaks the microgrid market out into two product segments: remote microgrids not connected to more extensive utility grids designed to produce electrical power for local use and grid-tied microgrids that can disconnect from utility grids and operate autonomously when necessary.

Furthermore, Transparency segments the microgrid market on the basis of application. These include: community and utility; campus and institutions; defense and military; commercial and industrial; and remote islands.

In addition to the military, leading U.S. utilities also see promise in the nascent renewable energy microgrid market. The U.S.’ largest utility group, Duke Energy, for example, is investing in and assessing prospects in the global microgrid market.

Outside of its regulated utilities, Duke also has a substantial equity stake in REC Solar and recently acquired Phoenix Energy Technologies, a developer of energy control and management systems for businesses. More recently, Duke struck a deal to partner with Santa Clara, California-based GreenCharge Networks to market and sell GreenCharge’s intelligent energy storage systems to
commercial customers.

Up until recently, microgrids have in large part been installed on remote islands and communities, as well as mining operations and other commercial-industrial sites too small and too far from existing grid infrastructure for utilities to justify extending out to reach them. Nearly all rely on diesel or other petroleum fuels to generate electricity, which comes at a high cost both in terms of money and environmental health and safety.

Coupled with rapid declines in the cost of emissions-free renewable energy technology such as wind and solar PV, recent drops in the cost of advanced stationary battery storage technology has altered the technological make-up of microgrids dramatically.

The global drive to reduce carbon and greenhouse gas emissions, as evidenced by the multilateral climate accord signed by some 195 national governments at the UNFCCC conference in Paris in December, is another significant factor fueling growth in renewable energy microgrids.

The potential to combine solar PV generation capacity and stationary advanced battery storage, for instance, is substantial enough to have led Navigant Research to classify ¨solar plus
storage¨ as a distinct microgrid market segment.

The confluence of all these factors is drawing a growing number of companies – from start-ups and supply chain partners to the world’s largest multinational energy and industrial engineering corporations – to enter the microgrid market.